Site Loader
Rock Street, San Francisco

I.Introduction

The 21th century witnessed
a significant rise in the development of technology. It is clear that
technology rockets and changes the life of human. Modern technology has been
effectively applied to many fields of life such as education, entertainment,
environment, health care and especially business. Technology helps e-business
players to have good communication with customers, to understand market field
of vision easily and to update hot trends. Therefore, it is worth saying that
technology has played an important role in promoting business. In recent years,
E-business has appeared and attracted a lot of attention. E-business is defined
by IBM (www.ibm.com/e-business) as ”the transformation of key
business, processes, through the use of Internet Technologies”. ”To day, IBM
calls E-business services (that) it provides for its clients on-demand
wed-services” (E-business and E-commerce Management, 2009, cited in IBM).
E-business is quite new, only 15 years ago, however, it develops quickly,
especially in such a potential market as Vietnam. According to Lai Viet Anh,
deputy director of Viet Nam E-commerce and Information Technology Agency under
the Ministry of Industry and Trade (VietNamNews, 2017), Viet Nam is one of the
fastest countries in the world in E-business field. However, there are many challenges
for Vietnamese businessmen who want to invest in E-business such as:
maintaining trust and loyalty of customers together with the risk of payments.
Thus, this paper, based on secondary data, will discuss opportunities and
challenges of E-business in Viet Nam as well as help businesses to have
appropriate strategies in E-business.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

II. Discussion

2.1. Status of E-business in Viet Nam

 15 years ago, E-business was a quite new
concept to Vietnamese. The number of people concerning about e-business was
very small and most of them understood about e-business unclearly. However, it
has been a heated topic in recent years. Shopping-online has been being widely
known and has become a shopping habit of a lot of customers, so it is
unsurprising that ” Viet Nam is one of the world’s fastest growing E-commerce
countries” (Lai Viet Anh, VietNamNews, 2017). The growth of E-business in Viet
Nam is attributed to many factors. Firstly, there were approximately twice more
the number of E-business enterprises in 2015 than that of 2014, making up around
2500 enterprises, and E-business network is more and more dense (VietNamNews, cited
in the 2015 Viet Nam E-Business Index (EBI) report). Moreover, according to
Chief of the Office of the Viet Nam E-Commerce Association (VECOM) Nguyen Minh
Ky at the ceremony announcing the report in Ha Noi, many cities of Viet Nam
have gained the very high index in E-Business. For example, Ho Chi Minh ranks
the first place with 73.3 points out of 100 points, a massive 72 points belong
to Ha Noi, followed by Da Nang with 62.2 points. Besides, some wedsites rocket
and contribute largely to the development of national economy, such as Lazada,
The Gioi Di Dong, Sen Do, and so on, retrieved from: http://english.thesaigontimes.vn/57157/Lazada-Thegioididong-and-Sendo-lead-e-commerce-market.html

Viet Nam’s E-business income is
expected to reach $US 7.5 billion in 2015 (the Saigontimes, cited in Google and
Singapore’s investment company Temasek).

2.2. Opportunities

Jack Ma – Chairman of Alibaba Group
in his meeting with Prime Minister Nguyen Xuan Phuc in Ha Noi in November 2017
stated that Viet Nam has many potential opportunities to develop E-business.
Firstly, ”with a young population, the country is in an advantageous position
to boost transnational E-Commerce and business-to-comsumer (B2C) trade” (The
Sai Gon Times Daily, 2017). According to the lastest report the total
population of Viet Nam in 2018 is around 96,000,000 people, and becomes one of
the most populated countries in the world, retrieved from: . http://worldpopulationreview.com/countries/vietnam-population/. Moreover, bar chart about Population
by Age and Sex, Viet Nam 2000 (Ministry of health, Health Statistical Yearbook,
2000) proves that the percentage of the youth is considerably more than that of
older. Young population is an extremely huge advantage because the young people
are easier to follow the development of technology and access the Internet. In
fact, young people are pilots in E-business when they start to sell their products
on Facebook. Therefore, it is obvious that E-business in Viet Nam will flourish
with the participation of the young.

 Not only young population but also the
development of technology is a pivotal factor to promote E-business in Viet
Nam. “The Internet has been a door to a myriad new business opportunities” (Kristie
Lorette, The advantages of E-Business). The fact that Internet in Viet Nam is
used by 60% of the poplation is affirmed by Phan Tam, deputy minister of
information and communication at the on-going APRICOT 2017 conference in Ho Chi
Minh City. According to official sources, two-thirds of people access the
Internet everday and more and more internet users access the Internet to shop online
(Internet usage and Development in Viet Nam, 2011). In the past, most
activities in the Internet were to search for information or to get entertainment,
not to shop online. Nevertheless, online-shopping “has seen the strongest
growth of all measured activities over the past three years” and ”has nearly
doubled since 2007” retrieved from: www.cimigo.vn . It is inevitable that that social
network together with the Internet plays a significant role in development of
E-Business, with nearly a half percent of the surveyed companies confirming
they do business via social network (E-Commerce gap remains disparity in Viet
Nam, VietNamNet, 2017).  Technology and
Internet are being invested strongly in Viet Nam as ” Viet Nam government is
looking to boost the country in its field of science and technology to
capitalise on this” (Cheryl Toh, Viet Nam’s National Development Programme sets
Tech 2020, 2016). Technology and Internet in Viet Nam attract not only the
investment of government but also the support of foreign companies. The
contract to be signed by Jack Ma and Viet Nam’s government about
science-technology cooperation between Alibaba group and Viet Nam promises many
great opportunities for E-business in Viet Nam to boom. (http://english.thesaigontimes.vn/56927/Jack-Ma-Vietnam-holds-huge-e-commerce-potential.html)

2.3. Challenges

Although e-business in VietNam has a
lot of potential opportunities to develop, “e-commerce has been some barriers
that deter its sustainable development including low comsumer trust in products
and services along with corcerns over online payment security” (cited in
VietNam’s e-commerce market booming, VietNamNews). First of all, maintaining
the trust and loyalty of customers is the biggest challenge in e-business. In
fact, in e-business, the e-businessmen only post imagines relating to products
on websites without more information, customers cannot actually see or handle
the items, so they will have lack of trust in what is shown on the websites
(Ngo Tan Vu Khanh & Gwangong Gim, 2014). Moreover, many websites sell fakes
which have the bad quality   than advertised. This makes customers less
interested in online products and they do not buy items on internet anymore.
The statement was affirmed by Chairman of the VietNam Internet Association Vu
Hoang Lien that a massive 81% percentage concern about the quality of products
when shopping online. It is extremely big number and if e-businessmen do not
build belief of comsumers, e-business will go to the blink of bankruptcy. “It
was this chaotic dissemination that led to a lack of trust among comsumers when
shopping online, preventing e-commerce development”, retrieved from: http://vietnamnews.vn/economy/419533/viet-nams-e-commerce-market-booming.html#tsxpbOAMGQ6tZ8Qp.97

In addition to maintaining trust and
loyalty of customers, the risk of payments is one of challenges in e-business.
Tran Huu Linh, head of VietNam E-commerce and Information Technology Agency
(VECITA) said that the development of e-business in Southeast Asian countries including
Viet Nam is being reduced by barriers relating to online payment. According to
the Viet Nam E-commerce Report 2015 by the Ministry of Industry and Trade, the
most common form of payment for customers is cash. “Most people still prefer to
pay in cash and payments via cards are not quite common”, Nguyen Duc Vinh,
chief executive officer of commercial bank Techcombank, told Thanh Nien weekly.
Explaning for this issue, Nguyen Hoang Minh, deputy director of the state Bank
of Viet Nam Branch in Ho Chi Minh City said that there are many reasons for people
to choose to pay in cash, one of which is that most population are rural people
and they do not have bank accounts. Moreover, a lack of ATMs in rural areas can
contribute to the issue. In e-business, that Vietnamese have a habit of using
cash to pay for products provokes many risks for companies which are
inexperienced in managing. In fact, some customers cancel order because they
are unsatisfied with products. In these cases, when goods are returned, sellers
cannot only sell products but also have to pay for shipment. Cost of shipment
has always been a problem for e-businessmen. This is also a cause preventing
foreign e-commerce investors from investing into Viet Nam.

III. Conclusion

To sum up, the above analysis has
shown the potential opportunities as well as the challenges of e-business in
Viet Nam. These factors are either subjective factors as maintaining trust and
loyalty of customers or objective factors as young population, the development
of technology and the risks of payments, but they have enormous influences on
the development or the decrease of e-business in Viet Nam. It is essential that
e-businessmen should clearly understand the chances and the barriers in order
to have effective strategies. Knowing the way to take advantage of the
opportunities and overcome challenges, e-business players will succeed, and it
is certain that e-business in Viet Nam will rocket dramatically.

Post Author: admin

x

Hi!
I'm Eunice!

Would you like to get a custom essay? How about receiving a customized one?

Check it out